Mortgage Legislation

Dominion, Volume 27, Issue 16, 13 October 1933, Page 11

Mortgage Legislation

Sir,—As seemingly the worst, of the economic crisis in New Zealand is passing, and better times approaching, may I, through your columns, suggest a means of preventing the re-intlation of land values which many of us believe are largely the cause, in this country, of our present troubles? I suggest the two following measures (a) The compulsory abolition of the personal liability covenant in all future mortgages; (b) The institution of a compulsory and adequate sinking fund of, say, 24 per cent, per annum (preferably combined with life insurance) for all mortgages. The abolition of the personal covenant would cause intending mortgagees .to searchingly investigate the real earning capacity and consequent value ot the security offered, while the institution ot a compulsory sinking fund would prevent to some extent the sale of properties at absurd prices, owing to inability of the mortgagor to pay not only interest on Ins mortgage but also nis contribution to the proportionate sinking fund of his unpaid purchase money. The measures could not be made retrospective, but, in my opinion, it would largely prevent the recurrence of such fictitious values and paper profits as have been the fashion during past years in this Dominion, and which, although some slight remediable legislative action has been taken, it . seems we are still struggling to maintain ; a “dead-load” of past, folly from which every farmer and shopkeeper is suffering.—l am, etc., E.v. Napier. October 11.